The influx of Polish plumbers and builders to London may soon be matched by a reverse migration of investment bankers. The boom in mergers and acquisitions has spread to the markets of central and eastern Europe and investment banks are rushing to set up operations there.

M&A in the region was worth nearly $100bn (€73bn) last year, according to data provider Thomson Financial, up from $40bn in 2004. This year $80bn worth of deals have been arranged.

Lazard has joined forces with Raiffeisen Investment, the M&A advisory business of Austria’s largest banking group, in an effort to win a bigger share of regional advisory business. The two sides have agreed to create a joint co-operation committee with four executives from each firm and joint targeting, origination and execution of new projects.

Raiffeisen provides contacts and experience, and Lazard brings cross-border dealmaking expertise, which is increasingly needed by companies from the region.

Ernst Fassbender, co-head of investment banking in Germany for Lazard, said: “The transactions in central and eastern Europe are getting larger, as you would expect from any maturing market. You now have meaningful domestic and intra-European dealing and the financing environment has improved.

“You also have a well-developed legal environment, which is very important, particularly for obtaining the appropriate debt financing. In part that is down to the European Union, but it is also because of the large, western supranational organisations that have been advising on deals.”

Fassbender cited maturing capital markets in the region, such as the Warsaw Stock Exchange, which has a market capitalisation of $300bn and a daily average trading volume of more than $250m.

Another driver for M&A highlighted by Fassbender was the capital amassed by Russian companies on the back of surging commodities prices and the desire of the Russian Government for those companies to become international organisations.

Alex Metherell, a managing director in Dresdner Kleinwort’s strategic advisory business, said: “If you look at Russia today, it has several substantial companies across nearly all sectors that were recently serving 250 million people, albeit as state-owned enterprises.

Now, as public capital markets take hold, they are looking to internationalise their businesses and become more like their western equivalents.”

Metherell said banks that were known in Russia tended to have an advantage in the region. “It helps to be seen as local even if you are foreign owned,” he said. Buying a Russian bank, as UBS and Deutsche Bank have done, can therefore bring benefits across the region.

However, there are few obvious specialists in regional M&A, said Fassbender. “If you look at buying something, there are no suitable M&A houses because the local players do not deliver an answer for the entire region.

“To set up a greenfield operation and hire the best people market by market would take a long time and be very expensive. Therefore working with a strong player such as Raiffeisen Investment was the ideal choice,” he added.

Barclays Capital is taking a different route. If its merger with ABN Amro succeeds, it will take control of the Dutch bank’s well-established Russian business. If not, it plans to open an office in Moscow and staff it with 100 people within a year.

To date, it has arranged loans for borrowers from Russia and central and eastern Europe from London. But as demand for debt financing in the region grows, chairman Hans-Joerg Rudloff said the bank wanted to be in on the ground. He said: “Most people build their businesses in Russia organically.

There have been few takeovers because there are not many targets. In my opinion, we will grow pretty rapidly, like in Paris or Frankfurt, because the market is as big.”

Icelandic bank Straumur is also looking to capitalise on the booming economies of eastern Europe. In Prague-based Wood & Company, it believes it has found an acquisition that will ultimately give it a presence across the region. Straumur has bought 50% of the Czech investment house for an undisclosed sum, with an option to take over the rest.

William Fall, chief executive of Straumur, said the bank’s strategy had been to act as an access point to European capital markets for clients across the Nordic region. In Wood it saw an opportunity to extend this strategy east. Wood has a 30% share of the shares traded on the Prague Stock Exchange and a presence in Slovakia and Poland.

Fall said: “It is a preferred point of access and that is what we want to become for international clients, as we are for clients in the Nordic region. Because we have expertise in the Nordic markets, we can deal with local issues, such as settlement regulations, for them.

"Wood enables us to extend this strategy into eastern Europe. These countries are the fastest-growing economies in Europe, which makes it an attractive market for us.”

The reason for signing a joint venture with Wood, rather than making an outright acquisition, was about incentivisation, said Fall.

He said: “You do not want to rush in and buy something, and then have the partners all go. We want Wood to grow with us and a significant amount of the purchase price was in our shares. This way, we keep the partners interested in the business.”

Banks may be taking different approaches to building a business in central and eastern Europe, but there is one thing they agree on: as the region comes of age, they have to be there.